TREND, IMPACT AND SECTOR-WISE CONTRIBUTION OF FDI ON THE ECONOMIC PROGRESS OF BANGLADESH
One of the key drivers of economic growth in the least developed and developing country is foreign direct investment (FDI). Physical capital can be developed, unemployment can be decreased, production capacity can be increased, exports can be improved as well as it may build good economic interactions between the local and international economies. Such that many new economic zones have been establishing in Bangladesh to attract FDI. The objective of the study is to estimate the contribution and sector-wise impact of FDI on the economy of Bangladesh and also measure the inflows of FDI trend of Bangladesh compared with other South Asian countries. For a total of 31 years, from 1991 to 2020, secondary sources were used to gather data relating to various economic indicators. There is an upward trend of FDI shown in the perspective of Bangladesh and the average inflows growth rate was 97.625 million USD per year. The share of FDI in the GDP of Bangladesh is around 1% only. The average maximum volume of FDI flowed in the ‘manufacturing’ sector and the growth rate was 51.824 million USD, whereas the minimum amount was seen in ‘Agriculture & Fishing’ sector. The regression analysis demonstrated that there is a significant effect of FDI on the economic growth of Bangladesh and the sector-wise model indicated that the FDI inflows in ‘Trade & commerce’, ‘Transport, Storage & Communication’ and ‘Services’ sectors have a positive impact on the economy of Bangladesh. Finally, compared with south Asian countries the analysis demonstrated that Bangladesh's position for FDI inflows is acceptable but not sufficient. Since Bangladesh has not been able to attract a satisfactory level of FDI, hence this paper makes some suggestions for enhancing the Investment environment in Bangladesh.
FDI, GDP, Economic Growth, Bangladesh, South Asia.